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Mercari (JP:4385)
:4385

Mercari (4385) AI Stock Analysis

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JP

Mercari

(OTC:4385)

Rating:75Outperform
Price Target:
¥2,802.00
▲(10.14%Upside)
Mercari's overall stock score is driven by strong financial performance and positive technical indicators. Its profitability and growth metrics are robust, and the stock shows bullish technical momentum. However, the valuation is moderate, and operational cash flow generation needs improvement.

Mercari (4385) vs. iShares MSCI Japan ETF (EWJ)

Mercari Business Overview & Revenue Model

Company DescriptionMercari, Inc. engages in the planning, development, and operation of the Mercari marketplace applications in Japan and the United States. Mercari, Inc. was incorporated in 2013 and is based in Tokyo, Japan.
How the Company Makes MoneyMercari generates revenue primarily through transaction fees collected from sales made on its platform. When a user successfully sells an item, Mercari charges a commission fee, which is a percentage of the item's sale price. This fee structure incentivizes more transactions and higher-value sales. In addition to transaction fees, Mercari may also earn revenue from shipping services, as it offers integrated shipping solutions to facilitate the delivery of items sold through its platform. Furthermore, Mercari may explore partnerships and advertising opportunities to bolster its revenue streams, though its primary income is derived from the fees associated with marketplace transactions. The company's growth and profitability are significantly influenced by user engagement, transaction volume, and the expansion of its user base in its operating markets.

Mercari Earnings Call Summary

Earnings Call Date:May 07, 2025
(Q2-2025)
|
% Change Since: 12.32%|
Next Earnings Date:Aug 05, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mix of significant achievements, such as record-breaking core operating profit and high profitability across business areas, alongside notable challenges like the decline in the U.S. GMV and issues with fraudulent usage. While the company showed strong financial performance, there are concerns about meeting future growth targets.
Q2-2025 Updates
Positive Updates
Record-Breaking Core Operating Profit
Mercari achieved a record-breaking consolidated core operating profit of JPY 7 billion, up 79% year-on-year.
High Profitability Across Business Pillars
All three business pillars (marketplace, fintech, and U.S.) achieved high profitability, with marketplace GMV growing by 5% and fintech credit balance increasing by 38% year-on-year.
Positive Adjustments and Feature Enhancements
Implemented product initiatives and enhancements, such as hassle-free car sales and C2B transactions, leading to increased engagement and item views.
Negative Updates
U.S. Business GMV Decline
The U.S. business GMV declined significantly by 27% year-on-year, with core operating profit at negative JPY 100 million.
Challenges in Achieving GMV Growth Targets
Marketplace and U.S. GMV growth rates fell below initial expectations, with challenging targets for the second half.
Fraudulent Use Impacts
Impact from fraudulent use of services was noted, requiring additional investments in countermeasures.
Company Guidance
During Mercari's FY 2025 second quarter earnings briefing, CFO Sayaka Eda highlighted the company's financial performance and strategic focus areas. The company achieved a record-breaking consolidated core operating profit of JPY 7 billion, representing a 79% increase year-on-year. Despite a slower-than-expected GMV growth rate in the marketplace and U.S. segments, improvements were seen in the latter half of the quarter. The marketplace GMV grew by 5% to JPY 296 billion, with a revenue increase of 2% to JPY 28.9 billion. The adjusted core operating margin, excluding investments in Mercari Hallo, stood at 46%. In fintech, the credit balance grew by 38% to JPY 213.3 billion, with a core operating profit of JPY 1.2 billion. The U.S. business saw a significant GMV decline of 27% year-on-year, yet improved its core operating loss to negative JPY 100 million. Looking forward, Mercari aims to enhance safety and user experience across its platform and achieve a core operating margin of 37% to 42% in the marketplace segment, with fintech targeting a JPY 3 billion core operating profit.

Mercari Financial Statement Overview

Summary
Mercari demonstrates strong financial performance, with robust profitability and growth. The income statement shows good margins and steady revenue growth. The balance sheet is stable, with manageable debt levels, while cash flows indicate recovery but require improvement in operational cash generation.
Income Statement
82
Very Positive
Mercari has shown a solid performance in its income statement metrics. The TTM (Trailing-Twelve-Months) gross profit margin is strong at 70.9%, indicating efficient cost management relative to revenue. The net profit margin improved to 8.6%, reflecting increased profitability. The revenue growth rate from the previous year is 1.7%, indicating steady growth. The EBIT and EBITDA margins are notable at 13.2% and 14.3%, respectively, showcasing operational efficiency. Overall, the income statement reflects healthy profitability and growth, with room for further revenue expansion.
Balance Sheet
77
Positive
The balance sheet of Mercari demonstrates a stable financial position. The debt-to-equity ratio is 2.14, suggesting moderate leverage but well within a manageable range. The return on equity (ROE) stands at 19.4%, highlighting effective use of equity to generate profits. The equity ratio is relatively low at 16.2%, indicating a higher reliance on liabilities to finance assets. While the company maintains a strong cash position, improving the equity ratio could enhance financial stability.
Cash Flow
68
Positive
Cash flow metrics for Mercari present a mixed picture. The free cash flow growth rate reflects a significant recovery from previous negative levels, indicating improved cash generation. The operating cash flow to net income ratio is 0.17, suggesting that operating cash generation needs enhancement relative to profits. However, the free cash flow to net income ratio of 0.15 underscores a positive trend in converting earnings into free cash flow. Focus on strengthening operational cash flows could improve the cash flow position.
Breakdown
TTMJun 2024Jun 2023Jun 2022Jun 2021Jun 2020
Income StatementTotal Revenue
190.60B187.41B171.97B147.05B106.11B76.28B
Gross Profit
135.15B129.73B114.42B95.14B81.80B55.61B
EBIT
25.16B18.87B17.02B-3.71B5.18B-19.31B
EBITDA
27.22B20.42B17.96B-3.04B13.06B-18.63B
Net Income Common Stockholders
16.44B13.46B13.11B-7.57B5.72B-22.77B
Balance SheetCash, Cash Equivalents and Short-Term Investments
183.74B197.31B202.05B211.41B171.46B141.01B
Total Assets
523.10B501.77B415.29B339.86B262.53B198.01B
Total Debt
181.33B193.31B157.53B131.35B71.15B52.45B
Net Debt
-2.41B-2.45B-38.74B-80.06B-100.31B-83.30B
Total Liabilities
438.11B429.63B360.06B301.87B222.52B162.65B
Stockholders Equity
84.70B71.84B54.67B37.68B39.63B34.78B
Cash FlowFree Cash Flow
2.49B-43.49B-37.35B-26.89B2.95B11.76B
Operating Cash Flow
2.86B-43.34B-36.88B-26.22B3.37B12.53B
Investing Cash Flow
-1.32B-877.00M-601.00M-671.00M6.91B-2.65B
Financing Cash Flow
-3.30B32.09B25.17B62.06B19.77B465.00M

Mercari Technical Analysis

Technical Analysis Sentiment
Positive
Last Price2544.00
Price Trends
50DMA
2330.69
Positive
100DMA
2259.24
Positive
200DMA
2205.66
Positive
Market Momentum
MACD
53.83
Negative
RSI
62.71
Neutral
STOCH
67.75
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:4385, the sentiment is Positive. The current price of 2544 is above the 20-day moving average (MA) of 2404.18, above the 50-day MA of 2330.69, and above the 200-day MA of 2205.66, indicating a bullish trend. The MACD of 53.83 indicates Negative momentum. The RSI at 62.71 is Neutral, neither overbought nor oversold. The STOCH value of 67.75 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:4385.

Mercari Peers Comparison

Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
75
Outperform
¥418.22B25.3821.33%3.01%-2.84%
63
Neutral
$6.96B11.512.80%3.85%2.70%-24.43%
$12.18B-22.97%
$9.65B38.8528.00%0.87%
$9.59B32.4948.74%2.18%
69
Neutral
¥75.07B14.06
2.53%29.11%8.08%
61
Neutral
¥82.78B24.55
0.53%56.13%124.78%
* Consumer Cyclical Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
JP:4385
Mercari
2,544.00
386.00
17.89%
RKUNF
Rakuten
5.62
0.44
8.49%
MONOF
MonotaRO Co
14.17
3.39
31.45%
SATLF
ZOZO
10.85
2.97
37.69%
JP:3964
Aucnet, Inc.
1,520.00
315.09
26.15%
JP:7685
BuySell Technologies Co., Ltd.
2,859.00
1,130.68
65.42%

Mercari Corporate Events

Mercari Reports Strong Profit Growth Amid Modest Revenue Increase
May 7, 2025

Mercari, Inc. reported its consolidated financial results for the nine months ending March 31, 2025, showing a modest increase in revenue by 2.3% compared to the previous year. The company achieved significant growth in core operating profit and operating profit, with increases of 48.7% and 58.9% respectively, indicating improved operational efficiency. The financial position of the company also strengthened with an increase in total assets and equity, reflecting a stable financial outlook. Despite the positive financial performance, the company maintained a policy of not issuing dividends for the fiscal year.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.